1. Field of the Invention
The present invention generally relates to computer software for business management and, more particularly, to a computer implemented method which provides decision support in the form of an enhanced (R,s,S) policy for periodic review single-item inventory control system when the review period is different from the basic time unit for demand realization and updates.
2. Background Description
The system under consideration manages the inventory level of an item, where at recurring intervals called the review period, the inventory level is reviewed and if necessary purchase orders are placed to replenish depleted inventory, in accordance with a pre-specified decision rule. An (R,s,S) inventory policy is one such decision rule that specifies that an order be placed when the level of inventory on hand plus on order falls below the levels (a specified number), and the amount of order be the difference between S (another specified number) and the present level of inventory on hand plus on order; i.e., every time the inventory position (which refers to the sum of inventory on hand plus on order) falls below s, an order is placed to bring it up to S.
For a periodic review inventory system, when the review period is different from the basic time unit for demand realization and updates, the (R,s,S) Policy is no longer optimal. What is needed is an alternate, improved method to decide how much to order and when to order.